Editor's Note: The Interest Rate Update appears weekly on this blog - check back every Monday morning for analysis that is always ahead of the pack.
Last week was a relatively quiet one for the factors that affect Canadian mortgage rates.
Our federal budget was dubbed a “non-budget” because its content was more benign than many had feared, with our capital-gains and principal-residence tax exemptions left intact, at least for now.
Government of Canada (GoC) bond yields continued to drop in sympathy with their U.S. counterparts, as investors weigh the likelihood of Trump-led stimulus programs, tax cuts and deregulation against the likelihood of new protectionist trade policies, immigration bans and political infighting. The bond market’s knee-jerk reaction to President Trump’s win always seemed overblown to me, and the recent drop in U.S. bond yields is a sign of investors recalibrating their initial post-election forecasts.
Five-year GoC bond yields fell by eight basis points last week, closing at 1.13% on Friday. Five-year fixed-rate mortgages are available at rates as low as 2.44% for high-ratio buyers, and at rates as low as 2.49% for low-ratio buyers. If you are looking to refinance, you should be able to find five-year fixed rates in the 2.69% to 2.84% range, depending on the terms and conditions that are important to you.
Five-year variable-rate mortgages are available at rates as low as prime minus 0.80% (1.90% today) for high-ratio buyers, and at rates as low as prime minus 0.60% (2.10% today) for low-ratio buyers. If you are looking to refinance, you should be able to find five-year variable rates in the prime minus 0.45% range (2.25% today), depending on the terms and conditions that are important to you.
The Bottom Line: Bond yields continued to drop last week, and with them, the odds of any near-term increases to our fixed mortgage rates. Bank of Canada Governor Stephen Poloz is scheduled to speak in Oshawa this Tuesday and it will be interesting to hear his take on the sustainability of the recent improvement in our economic data, especially given that it has corresponded with a recent slowing of U.S. economic momentum. Stay tuned.
March 27, 2017Mortgage |